ECONOMY

Container carrier capacity doubles in just seven years

A significant landmark in the ship industry was surpassed in the past two months, with regard to the establishment and growth of container carriers. More specifically, in July 2007, the world fleet of container carriers reached 10 million TEU (20-foot equivalent units), having doubled since 2000, over a period of seven years. In June 2007, container ship-building orders rose to 5 million TEU, with delivery times of less than four years. In 2007 alone, container ships are expected to carry 1 billion tons of cargo, forecast to climb to 1.5 million tons by 2011 in order to meet high demand. Such a momentous increase, however, poses certain questions as to the specific capacity. An answer certainly is not respective only to China, even though the number of containers from China rose by 100 million tons – i.e. 10 million loaded containers – over the past seven years. A ship that makes 10 trips per year is estimated as carrying a capacity of 1 million TEU, or an increase of 20 percent. A reference to China is by no means an effort to undermine or restrict its role, but to promote other data that are applicable in the international economic setting. In 2006, the global economy, ignoring the oil price hikes, hostilities and political confrontations, was especially generous, recording a global GDP growth rate of 5.4 percent, compared to 4.95 percent in 2004 and 5.3 percent in 2003. Asia and Africa have recorded significant growth in recent years, with inexpensive products, especially from China and India, having caused inflationary pressures on Atlantic economies. The oversupply of products from computers to raw materials from both China and India has upset the economies of many traditionally export-oriented nations. The container market reacted directly and has, especially since 2003, witnessed an unprecedented increase in orders. Between 1993 and 2003, the average fleet increase was up to 23 percent, and skyrocketed to 40 percent in 2004, 51 percent in 2005 and 53 percent in 2006. This continuous growth reasonably gives rise to the question as to whether there is a ceiling with regard to container ship capacity. It is certain that many smaller cargo vessels are still sailing around the world transporting fragile and non-fragile products. A more economical operation allows container ships to transport cargo that was in the past traditionally carried by other types of boats. And this is exactly where the current challenge lies. Presently, as much as 15 percent of world shipments is transported by container carriers. A reasonable question is whether this upward trend will continue and how long the above rate will continue to rise.